|By Business Wire||
|May 9, 2014 03:10 AM EDT||
The Executive Chairman of Telefónica (NYSE:TEF) (LSE:TDE), César Alierta, emphasised that “our performance in the quarter was in line with the targets set for the year. First quarter results show visible progress in the execution of the strategy announced for 2014, based on further reinforcing the differentiation of our products and services through a non-replicable infrastructure. In this sense, we are making significant investments, accelerating our network modernization”.
- The Company reaches a leverage ratio of 2.30 times OIBDA after having reduced its net debt by 2,657 million euros in the first quarter to bring it down to 42,724 million euros.
- The Company’s earnings grew organically (+1.5%) for the fourth quarter running to stand at 12,232 million euros at 31 March 2014. It is worth highlighting the growth of our mobile data earnings (+8.8%), which represent 40% of total mobile revenues, and the strong growth of our high-value client base, coming from mobile contract (+9%), smartphone penetration and also of our fibre and pay TV operations.
- OIBDA totalled 3,929 million euros and accelerates its organic growth (+0.5%) compared to the previous financial year thanks to the sustained growth of earnings and the success of the expenses control and efficiency measures implemented by the Company.
- The variation in exchange rates had an impact on our 1Q14 results by bringing year-on-year earnings growth down by 11.8 p.p. and reducing OIBDA by 11.7 p.p. Earnings were also affected by perimeter changes, especially by the sale of Telefónica Czech Republic, which brought them down by 3.1 p.p., with OIBDA falling by 3.7 p.p.
- The acceleration of our network modernization reflects in a significant organic CapEx increase (+29.5%) compared to the first quarter of 2013. Investments related with transformation and growth accounted for over two thirds of the total CapEx figure in the first quarter.
- Despite this significant organic increase of CapEx and the effect of exchange rates and perimeter changes, the Company reported a solid cash flow generation, with a relevant improving year-on-year by 796 million euros, the largest in a first quarter since 2011.
- The results reported by Telefónica Spain reflect the continued recovery of the business. Earnings show an important improvement in the downward trend in 3.7 p.p. compared to the previous quarter and an improved commercial development, mostly in fibre, pay TV and an increased preference for quality services. Movistar Fusión remained the fundamental lever for growth in Spain with a customer base of 3.2 million.
- Telefónica Brazil also continued to strengthen its leadership in the highest value segments thanks to the competitive advantage it enjoys in network coverage and quality and to the universal appeal of its commercial offerings. This translated into an organic earnings growth of 2.9% (ex-regulation) and once more highlights the Company’s net profit performance in the contract segment (1.2 million accesses) and with respect to fibre rollout, with the current figure of 1.5 million homes passed.
- Telefónica’s market financing activities during the first quarter ended it at around 5,700 million euros, meaning that the Company finds itself in a comfortable position regarding liquidity from which to tackle the next round of debt payments.
Telefónica’s 1Q14 results are in line with the Company’s internal earnings, OIBDA and CAPEX over sales estimates and therefore reiterates its operational and financial targets for the year, including the dividend. During the first three months of the year Telefónica moved forward with the implementation of its transformation strategy and operating model, the aim of which is to maximise value creation and make the most of the growth opportunities offered by the digital revolution.
According to Telefónica Chairman César Alierta, “we continue to improve our financial flexibility, posting the strongest first quarter cash flow generation in the last three years after registering a solid year-on-year improvement, despite higher investments, the negative impact of exchange rates and asset disposals. This allowed to register a further decline in net debt another quarter, bringing total reduction to around 16 billion euros over the last 7 quarters”.
In this respect, the results presented today by Telefónica reflect the improvement in the organic growth of its earnings and OIBDA thanks to the strategy of attracting high-value customers, the efforts being made to simplify its operation and cost savings. It is also worth highlighting the continued reduction of the Company’s debt level, which has fallen by 2,657 million euros with respect to December 2013 to stand, at the end of March of this year, at 42,724 million euros. Were operations subsequent to the closure of the first quarter to be included (sale of Telefónica Ireland), the debt would stand at 41,944 million euros. Therefore, at the end of March the debt ratio (net debt over OIBDA) stood at 2.30 times, and this would be reduced to 2.27 times were the aforementioned operations carried out after the close of the quarter to be included.
Regarding accesses, at the end of March they totalled 313.1 million, 1% less than one year ago, due precisely to the deconsolidation of the business in Czech Republic and to the sale of the residential business in the UK, without the effect of which they would have enjoyed a year-on-year growth of 2%.
By segments, mobile accesses increased by 3% year-on-year in organic terms to 247.5 million at the end of the quarter thanks to strong contract access growth (+9% organic), accounting for 35% of the total (+1 percentage point year-on-year). Particularly noteworthy is T. Brasil’s ongoing progress in capturing high-value customers (+28% year-on-year in contract customers, with net additions in the quarter up 70% year-on-year). Smartphone (all with a data plan attached) penetration stood at 30% at the end of March 2014 (+9 percentage points year-on-year) and retail fixed broadband accesses totalled 17.6 million, up 2% vs. March 2013 in organic terms. Pay TV accesses (3.6 million) rose 8% year-on-year, highlighting the performance of T. España (consolidating its recovery trend for the second quarter in a row) and the double-digit year-on-year growth of T. Hispanoamérica and T. Brasil.
According to César Alierta, “we are building a more sustainable growth model leveraged on higher customer satisfaction. The acceleration in the modernisation of our networks is reflected commercially in the evolution of our customer base; contract mobile accesses grew almost double-digit year-on-year underpinned by the acquisition of almost 6 million smartphone customers, doubling the figure of the first quarter of 2013 while in the fixed business, fibre customer base increased 90% year-on-year. As a result, the value of our customer base has increased due to both the improved ARPU and the higher loyalty, leading to a longer average customer lifetime”.
Apart from perimeter changes, exchange rate fluctuations, in particular the depreciations of the Brazilian reai and the Argentine peso along with the implicit devaluation of the Venezuelan bolivar, negatively impacted financial results. Thus, in the January-March period exchange rates deducted 11.8 percentage points to year-on-year revenue growth and 11.7 percentage points to OIBDA growth.
Revenue organic growth for the fourth quarter in a row
First quarter revenues totalled 12,232 million euros in January-March 2014, up 1.5% year-on-year in organic terms (-13.5% reported), posting positive growth for the fourth quarter in a row and accelerating vs. full-year 2013. Excluding the negative impact of regulation, organic revenues grew 3.4% compared with January-March 2013.
By services, mobile data revenue growth accelerated compared with the previous quarter (+8.8% year-on-year in organic terms; +7.8% in the fourth quarter of 2013), now accounting for 40% of mobile service revenues, up 2 percentage points compared with the first quarter of 2013. It is also noteworthy the performance of non-SMS data revenues in January-March 2014, improving year-on-year growth to 23.6% in organic terms and already accounting for 71% of total data revenues (+8 percentage points year-on-year).
Consolidated operating expenses totalled 8,548 million euros in the quarter, up 1.5% year-on-year in organic terms (-13.0% reported), with the pace of year-on-year growth easing for the second consecutive quarter due to strict cost control and efficiency measures, despite the high level of commercial activity.
Operating income before depreciation and amortisation (OIBDA) in the first quarter of 2014 amounted to 3,929 million euros, up 0.5% year-on-year in organic terms (-14.0% reported), with growth accelerating vs. full year 2013 and posting positive year-on-year growth for the second consecutive quarter. This performance was underpinned by sustained revenue growth and cost containment measures, along with efficiencies and synergies from the new operating model. Excluding the adverse impact of regulation, OIBDA grew by 1.9% compared with January-March 2013 in organic terms.
The OIBDA margin stood at 32.1% at the end of the first quarter, virtually stable year-on-year in organic terms compared with the same period of 2013 (-0.3 percentage points). Operating income (OI) in the first quarter of 2014 stood at 1,838 million euros, up 5.2% year-on-year in organic terms (-11.0% reported).
As a result, consolidated net income in the first quarter amounted to 692 million euros (-23.2% year-on-year; 16.6% underlying) and basic earnings per share amounted to 0.15 euros per share (-27.0% year-on-year; -20.0% underlying).
CapEx up to March totalled 1,555 million euros (-19.9% year-on-year) and included 187 million euros relating to the acquisition of spectrum in Colombia and Central America (695 million euros in the first quarter of 2013, mainly in the UK). In organic terms, investments rose 29.7% year-on-year, with more than 69% of total investments devoted to business transformation and growth.
As a result, free cash flow amounted to 339 million euros in the first quarter, the highest since 2011, posting a significant year-on-year improvement of 796 million euros.
Financing activity of 5,700 million euros in the quarter
In the first quarter of 2014, Telefónica's financing activity through bond and loan markets stood at around 5,700 million equivalent euros. This activity was mainly focused on strengthening the liquidity position and smoothing the debt maturity profile of Telefónica S.A. for the following years. Therefore, as of the end of March, the Group maintains a comfortable liquidity position to accommodate next years debt maturities. In Hispanoamérica, Telefónica's subsidiaries tapped financing markets for approximately 124 million equivalent euros in the first quarter of 2014. Also noteworthy is the 500-million-euro bond placement by T. Deutschland in January.
Telefónica maintains total undrawn committed credit lines with different credit entities for an approximate amount of 12,560 million euros, with around 11,250 million maturing in more than 12 months.
Digital Services and Telefonica Global Resources
In the new area of the Chief Commercial Digital Officer, recently established to bring digital services to the core of our businesses, we could highlighted in the B2B area, the M2M agreement signed by Telefónica with JCDecaux, the world’s leader in outdoor advertising, to bring connectivity and new digital features to a new range of smart M2M powered solutions for urban environment in Europe and Latin America; and the one reached with Tesla, an industry-leader of in-car telematics. Thus, M2M revenue grew by more than 50% year-on-year in organic terms in the first quarter.
With regards to Cloud services, revenue advanced by more than 20% organic year-on-year in the first three months of the year, gradually adding value to our offering. Information Security revenues grew slightly above 20% organic year-on-year in the quarter fueled by strong momentum in “CyberSecurity”.
It should be also mentioned some strategic investments made as the creation of “Axonix”, the first mobile Advertising exchange platform owned and powered by a mobile operator; the one reached with “Saluspot” for E-health services, which enables to offer free online health advice; and the Spanish cloud computing start-up “eyeOS” was acquired, enabling Telefónica to offer an open-source desktop virtualisation service.
In Video, within the area of Consumer, Telefónica acquired for Spain exclusive content rights in Moto GP and Formula 1. Thus, the strategic focus on fostering Pay TV growth is delivering positive results with revenues growing in organic terms by 12% year-on-year and accesses by 8% year-on-year in the quarter, and increasing market share in the main markets where the Company is present.
Additionally, in April the brand of the Digital Financial Services (“Yaap”) to be provided in Spain by the joint venture established with CaixaBank and Santander was announced. Two services will be launched in the coming months, “Yaap Shopping”, a virtual showroom helping small businesses, and “Yaap Money”, a peer to peer service that will enable people to send money from one mobile device to another.
Telefónica Global Resources continued driving the Company's technological transformation during the quarter, accelerating network modernisation and simplification, ensuring a higher quality of infrastructure and systems and enhancing the differentiation of products and services. In the global Network and Operations unit sharply accelerated the rollout of ultra-broadband infrastructure. Homes passed with fibre amounted to 5.8 million, around 80% more than in March 2013, and LTE sites deployment increased by more than 3 times year-on-year to reach more than 10,200 sites. The global IT unit is developing the Company's IT transformation strategy through: (i) consolidation, focusing on the Data Centres, technical infrastructure and corporate applications; (ii) simplification and transformation of applications; and (iii) support for transformation towards a Digital Telco.
Internet of @ThingsExpo, taking place November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with the 19th International Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world and ThingsExpo Silicon Valley Call for Papers is now open.
Jun. 24, 2016 04:15 PM EDT Reads: 1,043
Machine Learning helps make complex systems more efficient. By applying advanced Machine Learning techniques such as Cognitive Fingerprinting, wind project operators can utilize these tools to learn from collected data, detect regular patterns, and optimize their own operations. In his session at 18th Cloud Expo, Stuart Gillen, Director of Business Development at SparkCognition, discussed how research has demonstrated the value of Machine Learning in delivering next generation analytics to imp...
Jun. 24, 2016 02:15 PM EDT Reads: 323
SYS-CON Events announced today that ReadyTalk, a leading provider of online conferencing and webinar services, has been named Vendor Presentation Sponsor at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. ReadyTalk delivers audio and web conferencing services that inspire collaboration and enable the Future of Work for today’s increasingly digital and mobile workforce. By combining intuitive, innovative tec...
Jun. 24, 2016 01:00 PM EDT Reads: 1,282
Amazon has gradually rolled out parts of its IoT offerings, but these are just the tip of the iceberg. In addition to optimizing their backend AWS offerings, Amazon is laying the ground work to be a major force in IoT - especially in the connected home and office. In his session at @ThingsExpo, Chris Kocher, founder and managing director of Grey Heron, explained how Amazon is extending its reach to become a major force in IoT by building on its dominant cloud IoT platform, its Dash Button strat...
Jun. 24, 2016 12:00 PM EDT Reads: 1,528
Connected devices and the industrial internet are growing exponentially every year with Cisco expecting 50 billion devices to be in operation by 2020. In this period of growth, location-based insights are becoming invaluable to many businesses as they adopt new connected technologies. Knowing when and where these devices connect from is critical for a number of scenarios in supply chain management, disaster management, emergency response, M2M, location marketing and more. In his session at @Th...
Jun. 24, 2016 12:00 PM EDT Reads: 688
The cloud market growth today is largely in public clouds. While there is a lot of spend in IT departments in virtualization, these aren’t yet translating into a true “cloud” experience within the enterprise. What is stopping the growth of the “private cloud” market? In his general session at 18th Cloud Expo, Nara Rajagopalan, CEO of Accelerite, explored the challenges in deploying, managing, and getting adoption for a private cloud within an enterprise. What are the key differences between wh...
Jun. 24, 2016 11:15 AM EDT Reads: 560
It is one thing to build single industrial IoT applications, but what will it take to build the Smart Cities and truly society changing applications of the future? The technology won’t be the problem, it will be the number of parties that need to work together and be aligned in their motivation to succeed. In his Day 2 Keynote at @ThingsExpo, Henrik Kenani Dahlgren, Portfolio Marketing Manager at Ericsson, discussed how to plan to cooperate, partner, and form lasting all-star teams to change t...
Jun. 24, 2016 11:00 AM EDT Reads: 921
In his keynote at 18th Cloud Expo, Andrew Keys, Co-Founder of ConsenSys Enterprise, provided an overview of the evolution of the Internet and the Database and the future of their combination – the Blockchain. Andrew Keys is Co-Founder of ConsenSys Enterprise. He comes to ConsenSys Enterprise with capital markets, technology and entrepreneurial experience. Previously, he worked for UBS investment bank in equities analysis. Later, he was responsible for the creation and distribution of life sett...
Jun. 24, 2016 10:30 AM EDT Reads: 846
19th Cloud Expo, taking place November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy. Meanwhile, 94% of enterpri...
Jun. 24, 2016 09:45 AM EDT Reads: 1,140
SYS-CON Events announced today that Bsquare has been named “Silver Sponsor” of SYS-CON's @ThingsExpo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. For more than two decades, Bsquare has helped its customers extract business value from a broad array of physical assets by making them intelligent, connecting them, and using the data they generate to optimize business processes.
Jun. 24, 2016 09:30 AM EDT Reads: 1,091
There are several IoTs: the Industrial Internet, Consumer Wearables, Wearables and Healthcare, Supply Chains, and the movement toward Smart Grids, Cities, Regions, and Nations. There are competing communications standards every step of the way, a bewildering array of sensors and devices, and an entire world of competing data analytics platforms. To some this appears to be chaos. In this power panel at @ThingsExpo, moderated by Conference Chair Roger Strukhoff, Bradley Holt, Developer Advocate a...
Jun. 24, 2016 09:30 AM EDT Reads: 561
Internet of @ThingsExpo, taking place November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 19th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The Internet of Things (IoT) is the most profound change in personal and enterprise IT since the creation of the Worldwide Web more than 20 years ago. All major researchers estimate there will be tens of billions devices - comp...
Jun. 24, 2016 08:45 AM EDT Reads: 1,091
There is little doubt that Big Data solutions will have an increasing role in the Enterprise IT mainstream over time. Big Data at Cloud Expo - to be held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA - has announced its Call for Papers is open. Cloud computing is being adopted in one form or another by 94% of enterprises today. Tens of billions of new devices are being connected to The Internet of Things. And Big Data is driving this bus. An exponential increase is...
Jun. 24, 2016 08:45 AM EDT Reads: 1,186
A strange thing is happening along the way to the Internet of Things, namely far too many devices to work with and manage. It has become clear that we'll need much higher efficiency user experiences that can allow us to more easily and scalably work with the thousands of devices that will soon be in each of our lives. Enter the conversational interface revolution, combining bots we can literally talk with, gesture to, and even direct with our thoughts, with embedded artificial intelligence, wh...
Jun. 24, 2016 08:30 AM EDT Reads: 760
Cloud computing is being adopted in one form or another by 94% of enterprises today. Tens of billions of new devices are being connected to The Internet of Things. And Big Data is driving this bus. An exponential increase is expected in the amount of information being processed, managed, analyzed, and acted upon by enterprise IT. This amazing is not part of some distant future - it is happening today. One report shows a 650% increase in enterprise data by 2020. Other estimates are even higher....
Jun. 24, 2016 08:15 AM EDT Reads: 1,169
Cognitive Computing is becoming the foundation for a new generation of solutions that have the potential to transform business. Unlike traditional approaches to building solutions, a cognitive computing approach allows the data to help determine the way applications are designed. This contrasts with conventional software development that begins with defining logic based on the current way a business operates. In her session at 18th Cloud Expo, Judith S. Hurwitz, President and CEO of Hurwitz & ...
Jun. 24, 2016 08:15 AM EDT Reads: 1,396
In his general session at 18th Cloud Expo, Lee Atchison, Principal Cloud Architect and Advocate at New Relic, discussed cloud as a ‘better data center’ and how it adds new capacity (faster) and improves application availability (redundancy). The cloud is a ‘Dynamic Tool for Dynamic Apps’ and resource allocation is an integral part of your application architecture, so use only the resources you need and allocate /de-allocate resources on the fly.
Jun. 24, 2016 07:30 AM EDT Reads: 941
The 19th International Cloud Expo has announced that its Call for Papers is open. Cloud Expo, to be held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, brings together Cloud Computing, Big Data, Internet of Things, DevOps, Digital Transformation, Microservices and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding business opportuni...
Jun. 24, 2016 07:15 AM EDT Reads: 1,141
industrial company for a multi-year contract initially valued at over $4.0 million. In addition to DataV software, Bsquare will also provide comprehensive systems integration, support and maintenance services. DataV leverages advanced data analytics, predictive reasoning, data-driven diagnostics, and automated orchestration of remediation actions in order to improve asset uptime while reducing service and warranty costs.
Jun. 22, 2016 11:00 AM EDT Reads: 1,328
Vidyo, Inc., has joined the Alliance for Open Media. The Alliance for Open Media is a non-profit organization working to define and develop media technologies that address the need for an open standard for video compression and delivery over the web. As a member of the Alliance, Vidyo will collaborate with industry leaders in pursuit of an open and royalty-free AOMedia Video codec, AV1. Vidyo’s contributions to the organization will bring to bear its long history of expertise in codec technolo...
Jun. 19, 2016 12:45 PM EDT Reads: 1,218